2. Hudbay Minerals Inc. (NYSE:HBM)
Average Price Target Upside as of August 18: 47.84%
Share Price as of August 18: $7.73
Hudbay Minerals Inc. (NYSE:HBM) operates as a mining company in North and South America. The company mainly focuses on the exploration, development, and mining of different materials. It operates through three main business segments: Copper Production, Zinc Production, and Gold and Silver Production.
Hudbay Minerals Inc. (NYSE:HBM) acts as a raw material provider for numerous industries including renewable energy technologies, electronics, and construction materials. The company has mines in important geographical locations including Peru, Manitoba, and British Columbia, and sells its products to the international market and global manufacturers.
The company posted a robust second quarter of 2024, despite facing production challenges. During the second quarter, Hudbay Minerals Inc. (NYSE:HBM) produced 28.6-kilo tons of copper, 58.6 kilo ounces of gold, 738.7 kilo ounces of Silver, and 8.1 kilo tons of Zinc. All the segments showed considerable improvement from a year ago except for Zinc, which decreased 7.95% year-over-year. However, the production of copper increased by 31.8%, gold increased by 33.1%, and silver improved by 20.6% year-over-year.
This strong production growth resulted in the company making $425.52 million in revenue up 36.31% year-over-year. While the revenue generation capacity of the company is impressive, what’s more notable is its cash-making ability. Hudbay Minerals Inc. (NYSE:HBM) generated $30 million in free cash flow and continued its trend of positive cash flow over the last 12 months. As a result, the company ended the quarter on a strong financial footing with more than $524 million in cash and cash equivalents.
Should you invest in Hudbay Minerals Inc. (NYSE:HBM)?
Hudbay Minerals Inc. (NYSE:HBM) can be a good investment stating the company has grown its revenue by 16% during the past 10 years. Moreover, the company is on track to achieve its production targets for the year and has also achieved new milestones in terms of improving its consolidated cash cost. For instance, the cash cost improved to $1.14 per pound of copper during the quarter, leading to an improvement in cash cost guidance to a range of $0.90 to $1.10 per pound.
HBM is cheap at current levels, it is trading at 14 times its forward earnings, which is an 11% discount to its sector. 14 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $11.43 presenting an upside of 47.84%% from the current level.
L1 Long Short Fund stated the following regarding Hudbay Minerals Inc. (NYSE:HBM) in its Q2 2024 investor letter:
“Hudbay Minerals Inc. (NYSE:HBM) (Long +31%) shares rallied over the quarter driven by rising copper and gold prices, as well as strong production results. The company’s first quarter results showed higher gold production and robust operating performance at both its major assets, which exceeded consensus expectations. In addition, the company announced a ~US$400m equity raise to support balance sheet de-leveraging and fund its key growth projects. Hudbay is a mid-tier mining company primarily producing copper, alongside gold and zinc, with its key assets located in Canada and Peru. We are attracted to Hudbay due to our positive medium-term outlook for copper and the company’s strong near-term free cash flow generation. This cash generation potential will allow the company to de-lever and recycle capital back into its highly prospective exploration program and major growth projects, most notably its Copper World project in Arizona.”
